MARCH 6, 2014 • Last August Onlive Inc. entered into a process similar to bankruptcy called Assignment for the Benefit of Creditors. Nothing much has been heard since from the early cloud game streaming service until today. During the interim OnLive has invested in technology upgrades by adding thousands of new servers, opened data centers in Chicago and Seattle, plus increased capacity at existing data centers in Virginia, the San Francisco Bay Area, Dallas and Luxembourg. Such investment, while welcome to existing users of the service, was also necessary for OnLive’s new PC-centric streaming model. Existing customers who have the original OnLive living room hardware are not being discarded, but the service’s forward focus is definitely shifting away from providing hardware. Moving forward the company is touting its new $14.99 (£9.99) monthly CloudLift subscription service for PC owners. Games that are already owned by the consumer, or purchased digitally, can then be streamed to other devices at or away from home – including tablets, lightweight laptops, Macs, and HDTVs that support OnLive. The other main subscription option is the $9.99 (£6.99) monthly PlayPack that delivers cloud access to 250 titles between similar platforms. Another new service in testing is OnLive Go, which is intended to eventually support instant cloud access to fully featured MMOs.
In addition to its technology announcements, OnLive also introduced a new senior management team. Coming in as executive chairman is Mark Jung, who co-founded the IGN game lifestyle site, and served as its chief executive. Jung was also CEO of the video streaming service VUDU. Carrie Holder moves over from Electronic Arts to become director of partner management. Bringing experience from executive stints at Playdom, Kabam, Trion Worlds, GameTap and IGN, Rick Sanchez is the new vice president of product and marketing. Responsible for the integration of OnLive gaming onto tablets, Smart TVs and related devices is Don Gordon, formerly of Gracenote Inc.
Impact: The new OnLive reminds us a lot of the old Gaikai before the transition into PlayStation Now. We have always been fond of the concept of cloud delivery of games to multiple platforms without the necessity of the user needing high-end equipment to enjoy the content. Two major issues always dampened that enthusiasm, however: absence of lag during game play and the associated cost of securing a geographically wide network of servers. The old OnLive fell short on both counts. Our estimates last year were that OnLive had between 20,000 to 30,000 users playing during the month. And we know that by last August only about 2,000 at most played concurrently, which wasn’t enough customers to support OnLive’s infrastructure costs. Given these new cloud ambitions, seeing further investment in servers is welcome from a consumer perspective, yet breakeven costs have now also risen. Despite shedding its hardware business OnLive must attract a substantial number of new subscribers, and soon, to succeed. That will take a sizable marketing campaign to accomplish, which adds to the costs further. Another area of concern is the subscription model itself. CloudLift is an intriguing service that allows one to travel effortlessly with the games one already owns. Paying a subscription for the pleasure will make sense to those who appreciate the utility. Our question is how many on-the-go people are out there who have time to play a full-featured PC game on a tablet or laptop while on a business trip? Another demographic that would be interested in CloudLift are college students away from home, but many of them are perennially short of cash. As for smorgasbord services such as OnLive’s PlayPack, we have yet to see any of them really break out with consumers. Adding the cloud mobility and platform enhancements makes OnLive a much more compelling sell if the games can be played at reasonable frame rates with crisp input response. OnLive has been on a rough trip the last year, but this new model, plus the addition of strong new leadership, proves to us that primary investor and venture capitalist Gary Lauder is serious about turning the service around. Whether mainstream consumers are ready for what OnLive has to offer is the question.
